Lehigh County's proposed $85.8-million budget, which is up for first reading before the commissioners tonight, has stirred debate over economic policies and tax increases.

The majority of commissioners, including budget chairman Don Davies, agree with County Executive David K. Bausch's administration that taxes should go up by 3 mills. They believe that revenue generated from a 3-mill increase will allow the county to go through 1986 fiscally healthy at a time when state and federal funds may be cut.

However, Commissioners John McHugh, Leon Eisenhard and Donald Wieand Jr. have voted to have the proposed 3-mill increase reduced to 2.5 mills. Because the commissioners were able to cut $800,000 from the budget, they claim the savings should be passed along to the taxpayer. One mill generates $1.4 million.

The debate began last week during a major budget session and will most likely continue until the budget is adopted sometime later this month. The debate highlights two economic philosophies - one that gives the taxpayers immediate relief and the other that asks the taxpayer to forgo the "quick fix" so revenues can be invested in an effort to hold down future tax increases.

At the crux of the debate is what to do with $800,000 the commissioners cut from the budget during the last month. Davies and the majority of commissioners want to see the money put into the Wiesenberg fund, where it can be invested to yield interest. They stress the money must be put into the Wiesenberg fund to cover the $1 million the Bausch administration took out of the fund to balance the proposed budget.

The Wiesenberg fund is the result of a lawsuit the county filed against the engineering firm of Wiesenberg Associates over construction of the county's defunct pretreatment plant. A number of parties including Stroh Brewery and Kraft became involved in the suit, which resulted in the county winning a $7-million out-of-court settlement.

Davies and others have consistently stated that the Wiesenberg money should "be restricted" to construction of the new $30.2-million sewage pretreatment plant or other major capital or unforeseen expenses. "I'd rather use it for major challenges . . . rather than for balancing the budget," said Davies.

Davies and Commissioner Judith Diehl, who sponsored the motion last week to keep the proposed tax hike at 3 mills, said by restoring the Wiesenberg fund the county can earn more on investments, which will strengthen the county's economic foundation in coming years.

Currently, about $5 million of the Wiesenberg money is invested. Commissioner Kenneth Mohr said the principle of this money can be used for the proposed pretreatment plant while the interest it generates can be put into the general fund.

The majority of commissioners claim it is especially important to invest the money given the Reagan administration's philosophy of cutting federal funding to local governments. The commissioners said nu- merous times during budget hearings that this would drastically affect outside funding and stressed the need for frugal money management.

Also, by reducing the tax hike to 2.5 mills, Diehl said the taxpayer owning a $50,000 home would only save $6 a year. "That would be a minuscule savings," said Davies.

McHugh claims the $800,000 should be given to the taxpayer. "I just feel that the taxpayer is in the mood to have a lower millage so he or she can invest their savings as they see fit," said McHugh. He said he "was surprised" last week when the majority of commissioners voted against reducing the tax hike to 2.5 mills.

Mohr, who many times supports McHugh, disagrees. "It would be fiscally irresponsible" to use the $800,000 for a tax cut. "We'd only be fooling ourselves and the public by using that money now."

McHugh said the majority of commissioners "very quickly" departed from talk of cutting taxes to adopting the thinking of the Bausch administration

For years the Bausch administration has invested millions of dollars to earn interest. This has been a major reason property taxes haven't been raised in the county for nine years. However, these funds are drying up, and because the administration was reluctant to cut programs, a tax hike was proposed.

Neither Bausch nor county Administrator Terry Schutten could be reached yesterday to comment on the commissioners handling of the budget. When asked for an administration opinion on the budget, deputy fiscal officer Richard Klotz said, "That's a major policy statement. I can't answer that. It will have to come from either Dave or Terry."

In a comment related to recently re-elected commissioners Mohr and Sterling Raber, McHugh said the vote against reducing the tax hike "would not have been the case if the vote were taken before the Nov. 5 election." The vote on the tax hike was taken the day after the election.

However, both Mohr and Raber had stated during budget hearings that the taxpayer would have to get used to paying higher taxes. "I've stood my ground on that," said Mohr.